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Ratio Analysis

Total questions: 25

Worksheet time: 45mins

Name
Class
Date
1.

Mathematical expression of two financial items is known as

a)

Mathematical Analysis

b)

Mathematical expression

c)

Ratio analysis

d)

Ratio expression

2.

Efficiency ratios highlights:

a)

How well assets and liabilities are managed

b)

Measures how quickly assets can be converted to cash

c)

Share of ownership in a company

d)

A comparison of two amounts

3.

Which of the following is the correct formula for calculating Return on investments(ROI)

a)

N.P. before interest but after tax *100/Capital employed

b)

N.P. before interest and tax *100/Capital employed

c)

N.P. after interest & tax *100/Capital employed

d)

None of these

4.

Liquid Assets= ?

a)

CA- Prepaid expenses

b)

CA- Inventory- Prepaid expenses

c)

CA + Inventory- Prepaid expenses

d)

CA- Inventory + Prepaid expenses

5.

If working capital of a company is nil, what will be the current ratio?

a)

1:1

b)

0:1

c)

1:0

d)

2:1

6.
If total expenses exceed total revenue, a net loss is reported
a)
True
b)
False
7.
What does COGS stand for?
a)
cost of goals scored
b)
cost of goods stocked
c)
cost of goods sold
d)
cost of goods solvent
8.

How do you calculate Gross Profit?

a)

Sales - COGS

b)

Sales - NP

c)

COGS - Expenses

d)

COGS - NP

9.
Examples may include salaries, utilities, rent, insurance, and office supplies.
a)
Revenue
b)
Expense
c)
Net Income
d)
Net Loss
10.
The sources of money generated by the sale of products or services.
a)
Revenue
b)
Expenses
c)
Net Income
d)
Net Loss
11.
This document communicates what the entity owns in terms of assets, what it owes in the terms of liabilities, and the difference between those two which represents what the owners o the company are entitled to.
a)
Income Statement
b)
Balance Sheet
12.

What a company owes to creditors:

a)

Assets

b)

Liabilitites

c)

Equity

13.
You are presented a financial statement and from it you can tell what the business owed looking at a financial statement. By studying the information on the statement, you can tell what the business owns and what it owes as of a certain date. You are looking at:
a)
Income Statement
b)
Assets
c)
Revenues
d)
Balance Sheet
14.

The current ratio is also known as the:

a)

Quick ratio

b)

Working capital ratio

c)

Cash flow ratio

d)

Capital structure ratio

15.
What are assets?
a)
What a company owns; anything of value owned by a business.
b)
Costs of operating a business.
c)
Detailed plans for the financial needs of individuals, families, and businesses.
d)
Differences between actual and budgeted performance.  
16.
What are liabilities?
a)
The money paid to employees.
b)
Costs of operating a business.
c)
The act of buy items. 
d)
What a company owes.
17.
What is owner equity?
a)
The value of the business after liabilities are subtracted from assets; the value of the owner's investment in the business.
b)
What a company owes.
c)
Documents that are used to record and analyze the financial performance of a business.
d)
All income a company receives overtime.
18.
Financial ratios that tell how well a company can pay off its short-term debts and meet unexpected needs for cash.
a)
liquidity ratios
b)
efficiency ratios
c)
leverage ratios
d)
profitability ratios
19.
Financial ratios that tell how much of each dollar of sales, assets, and owner's investments resulted in net profit.
a)
liquidity ratios
b)
efficiency ratios
c)
profitability ratios
d)
leverage ratios
20.

What is the formula for Gross Profit Margin

a)

Profit / Net sales revenue X 100

b)

Gross profit / Net sales revenue X 100

c)

Gross profit / Sales revenue X 100

d)

Profit / Cost of sales X 100

21.

When the concept of ratio is defined in respected to the items shown in the financial statements, it is termed as

a)

Accounting ratio

b)

Financial ratio

c)

Costing ratio

d)

None of the above

22.

The definition, “The term accounting ratio is used to describe significant relationship which exist between figures shown in a balance sheet, in a profit and loss account, in a budgetary control system or in a any part of the accounting organization” is given by

a)

Biramn and Dribin

b)

Lord Keynes

c)

J. Betty

d)

None of the above.

23.

The relationship between two financial variables can be expressed in:

a)

Pure ratio

b)

Percentage

c)

Rate or time

d)

Either of the above

24.

Profit for the objective of calculating a ratio may be taken as

a)

Profit before tax but after interest

b)

Profit before interest and tax

c)

Profit after interest and tax

d)

All of the above

25.

In the DuPont anlaysis return on equity (ROE) is equal to

a)

(Net Income/ Purchases) * (Net Sales/Total Assets) * (Total Assets/Total Equity)

b)

(Net Income/ Sales) * (Net Sales/Total Liabilities) * (Total Assets/Total Equity)

c)

(Net Income/ Sales) * (Net Sales/Total Assets) * (Total Assets/Total Equity)

d)

(Gross Profit/ Sales) * (Net Sales/Total Assets) * (Total Assets/Total Equity)

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